Pakistani rupee weakens sharply in likely devaluation by c.bank

In this file photo, Money dealers count Pakistani rupees, right, and US dollars at a currency exchange in Islamabad on March 12, 2014. (AFP)
Updated 20 March 2018
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Pakistani rupee weakens sharply in likely devaluation by c.bank

ISLAMABAD: Pakistan’s rupee weakened sharply against the dollar on Tuesday in what appeared to be a currency devaluation by the central bank, traders said, the second such intervention in the last three months.
The rupee plunged to about 115.5 per dollar in early trading from 110.5 at Monday’s close, traders said. Abid Qamar, spokesman for the State Bank of Pakistan (SBP), told Reuters the rupee plunge was a “market driven” event.
However, foreign exchange traders say the central bank’s withdrawal of support for the rupee in daily market operations on Tuesday sent the currency lower.
The SBP devalued the local currency in a similar manner by about 5 percent in December amid balance of payments pressures due to a widening current account deficit and dwindling foreign reserves. The market was broadly expecting another devaluation this year.
“Apparently the central bank withdrew support,” Fawad Khan, head of research at BMA Capital, told Reuters on Tuesday.
Withdrawal of support would have the effect of devaluing the currency as the SBP is the most influential player in the thinly-traded local foreign exchange market and controls what is widely considered a managed float system.
In response to Reuters’ queries about the rupee’s decline on Tuesday, the central bank’s Qamar said it was triggered by “some payment pressures which are building within the market” and added that the central bank would be “observing the market where it is moving toward.”
Pakistan’s economy has been growing at above 5 percent, the fastest pace in a decade, but a surge in imports has widened its current account deficit and prompted analysts to suggest the country may need an International Monetary Fund (IMF) bailout in the coming 12 months.
“We believe this is much needed as Pakistan’s external account has deteriorated as of late,” the Topline Securities brokerage said in a flash note to clients on Tuesday morning after the rupee weakened.


US in criminal probe of China's Huawei

Updated 17 January 2019
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US in criminal probe of China's Huawei

  • The Wall Street Journal said the US justice department is looking into allegations of theft of trade secrets from Huawei's US business partners
  • Huawei forcefully denied accusations that his firm engaged in espionage on behalf of the Chinese government

WASHINGTON: US authorities are in the "advanced" stages of a criminal probe that could result in an indictment of Chinese technology giant Huawei, a report said Wednesday.
The Wall Street Journal, citing anonymous sources, said the Department of Justice is looking into allegations of theft of trade secrets from Huawei's US business partners, including a T-Mobile robotic device used to test smartphones.
Huawei and the Department of Justice declined to comment on the media report.
However, Huawei noted that "Huawei and T-Mobile settled their disputes in 2017 following a US jury verdict finding neither damage, unjust enrichment nor willful and malicious conduct by Huawei in T-Mobile's trade secret claim."
The move would further escalate tensions between the US and China after the arrest last year in Canada of Huawei's chief financial officer Meng Wanzhou, who is the daughter of the company founder.
The case of Meng, under house arrest awaiting proceedings, has inflamed US-China and Canada-China relations.
Two Canadians have been detained in China since Meng's arrest and a third has been sentenced to death on drug trafficking charges -- moves observers see as attempts by Beijing to pressure Ottawa over her case.
Huawei, the second-largest global smartphone maker and biggest producer of telecommunications equipment, has for years been under scrutiny in the US over purported links to the Chinese government.
Huawei's reclusive founder Ren Zhengfei, in a rare media interview Tuesday, forcefully denied accusations that his firm engaged in espionage on behalf of the Chinese government.
The tensions come amid a backdrop of President Donald Trump's efforts to get more manufacturing on US soil and slap hefty tariffs on Chinese goods for what he claims are unfair trade practices by Beijing.
In a related move, lawmakers introduced a bill to ban the export of American parts and components to Chinese telecom companies that are in violation of US export control or sanctions laws -- with Huawei and fellow Chinese firm ZTE the likely targets.
"Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People's Liberation Army," said Republican Senator Tom Cotton, one of the bill's sponsors.
Democratic Senator Chris Van Hollen said in the same statement: "Huawei and ZTE are two sides of the same coin. Both companies have repeatedly violated US laws, represent a significant risk to American national security interests and need to be held accountable."
Last year, Trump reached a deal with ZTE that eases tough financial penalties on the firm for helping Iran and North Korea evade American sanctions.
Trump said his decision in May to spare ZTE came following an appeal by Chinese President Xi Jinping to help save Chinese jobs.